Sri Krishna Institute of Management: A Study On Working Capital Managemnet"

SRI KRISHNA INSTITUTE OF MANAGEMENT
TRIMESTER V, 2011
ACADEMIC YEAR 2009-11
PROJECT SYNOPSIS
ON
“A STUDY ON WORKING CAPITAL MANAGEMNET”
AT
PEPSICO INDIA HOLDING LIMITED
SUBMITTED BY
MAHESH KUMAR. B
REG.NO. 98001164030
INTRODUCTION
AN STUDY ON WORKING CAPITAL MANAGEMENT
This topic has been chosen to help Pepsico india holding limited palakkad in improving the
return on Investment, which can be done either by maximizing profit keeping capital constant
or by reducing capital profit constant. In the second case since fixed capital or more or less
fixed, the option left for the company is working capital which in order to maximize the return
have to be used efficiently and effectively. The objective of the study is to examine the extent of
used of permanent working capital and variable working capital, comparison of change in
working capital from previous year to the year of examination and liquidity position.
Knowledge of the working capital helps us in interpretation of financial terms and

measure to be taken to improve the health of the organization.
WORKING CAPITAL
Working capital management is concerned with problems arising while managing current assets,
current liabilities and the inter relationship that exist between them.The term current assets
refers to those assets which in ordinary course of business can beturned in to cash within one
year without undergoing a diminution in their value and without disrupting the operation of the
firm. The major current assets are cash, marketable securities, account receivable and inventory.
Current liabilities are those liabilities which are intended at their inception to be paid in ordinary
course of business, within a year, out of the current assets or earnings of the concern. The basic
current liabilities are account payable, bill payable, bank over-draft, and outstanding expenses.
The goal of working capital management is to manage the firm’s current assets and current
liabilities in such way that the satisfactory level of working capital is mentioned. The current
assets should be large enough to cover its current liabilities in order to ensure a reasonable
margin of the safety.
Working capital is calculated using the formula:
Current Assets - Current Liabilities = Working Capital
Types of working capital
1. Permanent working capital

To carry on a business in an efficient manner, certain level of working capital is necessary
on a continuous and uninterrupted basis which is termed as permanent working capital.
This need arises due to the operating cycle. i.e., to bridge the gap between the operating
cycle, permanent working capital is very necessary.
2. Temporary working capital

Any amount over and above permanent working capital is termed as temporary or
variable or fluctuating working capital. This portion of the working capital is required to
meet the fluctuating demand arising out of change in production, sales or seasonal
fluctuations etc.
Determinants of working capital
1. Nature of the business

2. Production cycle
3. Business cycle
4. Production policy
5. Credit policy
6. Availability of raw materials
7. Profit level
8. Level of taxes and government policies
9. Dividend policy
10. Depreciation policy
11. Price level changes
OBJECTIVES OF THE STUDY

Primary objective
 To examine the effectiveness of working capital management polices with the help of
accounting ratio.
 To identify the efficiency in the management and utilization of its current assets.
 To compare and analyze various components of working capital management such as

Accounts receivables, accounts payables, inventory position, credit management, etc.
 To know whether the company is prepared enough working capital to face any kinds of
contingencies.
Secondary objective
 Helping to find out opportunity in effective utilization of resources.

 To know the liquidity position of the company.
RESEARCH METHODOLOGY
The research would be on the basis of financial statement of the company. The study would be
carried on for the company and information would be gathered from the employee of the
company also an analysis on the deviation from expected performance and actual performance
is added.
DATA COLLECTION
Primary Data
The data will be collected with the help of financial provided by the company and direct
interview of the people working in organization.
Secondary Data
Company Journals, Brochures, internet, Annual reports of the company, etc.
TOOLS OF FINANCIAL ANALYSIS
Appropriate tools and techniques will be used for the analysis.
LIMITATION
 The study is done with an expectation that the data disclosed by the staffs are true.
 The company policy in restrict disclosing important data from the company.
 The whole function is carried out through ERP software with the help of IBM.

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SRI KRISHNA INSTITUTE OF MANAGEMENT

“A STUDY ON WORKING CAPITAL MANAGEMNET”

PEPSICO INDIA HOLDING LIMITED

Knowledge of the working capital helps us in interpretation of financial terms and

Current Assets - Current Liabilities = Working Capital

Types of working capital

1. Permanent working capital

2. Temporary working capital

Determinants of working capital

1. Nature of the business

OBJECTIVES OF THE STUDY

 To compare and analyze various components of working capital management such as

 Helping to find out opportunity in effective utilization of resources.

Company Journals, Brochures, internet, Annual reports of the company, etc.

TOOLS OF FINANCIAL ANALYSIS

Appropriate tools and techniques will be used for the analysis.

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